Words and Phrases - "pension plan"
19 January 2015 External T.I. 2014-0547271E5 F - SERP and Lump-Sum Averaging
Before concluding that the retroactive deferral under ss. 110.2 and 120.31 could apply to lump sum payments received from a supplemental employee retirement plan, CRA stated:
A supplemental employee retirement plan is a non-registered pension plan that is generally established to provide superannuation or pension benefits to the beneficiaries of the plan to supplement those provided by the employer's registered pension plan. Generally, when such a plan is funded, it is considered a retirement compensation arrangement. Amounts received by the beneficiaries of such an agreement generally constitute superannuation or pension benefits and are taxed in the year of payment under paragraph 56(1)(x). Similarly, amounts paid under an unfunded supplemental employee retirement plan are generally included in computing the income of the beneficiaries as superannuation or pension benefit in the year in which they are received. This occurs under paragraph 56(1)(a).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 110.2 - Subsection 110.2(1) - Qualifying Amount | generally available for lump sum commutation from funded or unfunded SERP/T1198 recommended | 146 |
Jacques v. The Queen, 2016 TCC 245
The taxpayer received a lump sum of $390,000 on the death of her sister (a U.S. resident), being the balance in her sister’s 401(k) plan. As Graham J characterized the plan as a savings plan rather than a superannuation or pension fund or plan, this amount was not includible in the taxpayer’s income.
Graham J found that the fact that employer made contributions and that the contributions were vested were more consistent with a superannuation or pension fund or plan than a savings plan. Aspects which were neutral were the fact that the money was being saved towards retirement, that employees could opt out of participation, and that each employee could direct how his or her account would be invested. However, Graham J found that the ability of an employee to significantly vary the amount contributed from nil to 50% of his or her compensation, the ability to make early withdrawals, and most importantly (having regard inter alia to Woods) that the Plan did not provide for the payment of anything that could be described as a fixed or determinable allowance or a regular post-retirement income were far more consistent with a savings plan than a superannuation or pension fund or plan. In fact, the default rule was that distributions out of the Plan were to be made in a single lump sum payment. Graham J concluded that the Plan was clearly designed to encourage employees to save money for retirement, but that it was not a pension plan.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - superannuation or pension fund or plan | 401(k) plan not a pension plan | 139 |